Opinion

Insurance protection key to rideshare debate

Recently the Assembly unanimously passed my bill AB 2293. This common sense legislation will clarify insurance coverage plans for transportation network companies (TNC), such as Uber, Lyft and others. My bill also requires important disclosures from TNCs that ensure drivers and all parties are aware of the insurance policy coverage in place. The legislation, AB 2293, passed 71-0 in a unanimous and bipartisan vote and now moves on to the Senate policy committee.

The popularity and rapid evolution of ridesharing companies such as Uber and Lyft has been a lesson in the rise of the new “sharing” economy. They are supplying a demand that the marketplace is welcoming. But with this growing popularity comes responsibility and we must ensure that such rapid innovation isn’t ignoring the safety of consumers – in this case – unsuspecting passengers and drivers. As these TNCs have grown, so have gaps in insurance coverage leading to confusion among who is liable in the event of a car accident, sometimes tragic ones. My carefully crafted bill addresses this concern and clearly defines when commercial activity begins and ends, and who is responsible for coverage at all times. And it does so without stifling the innovation and creativeness that TNCs are bringing to the fore.

AB 2293 will do four things: it requires TNCs to disclose to drivers upfront that their personal insurance will not apply when engaging in commercial TNC activities; it defines in statute that TNC activities begin once the “app” is turned on and the TNC services end when the “app” is turned off; it clarifies that the TNC business company insurance is the primary insurance coverage; and it requires TNCs’ liability insurance to defend their drivers when the driver has a claim or accident.

This common sense approach makes sure the public is protected and makes it abundantly clear that a TNC’s commercial insurance coverage applies during the time a driver is engaged in commercial activity. Unlike other proposals, this does not mean TNCs have to carry burdensome, around-the-clock commercial insurance. To clarify, it means when the driver turns on the “app,” which indicates that the drivers is “open for business,” and ceases when the driver turns the “app” off. No other commercial activity is afforded that standard today.

Meanwhile, proposals put forward by the TNCs fail to provide full coverage during the entire period a driver is engaged in commercial TNC services. Instead, they could force all personal auto policies throughout California to subsidize the cost of the commercial activities of their drivers. Such coverage will incentivize litigation to find ways to fill the resulting coverage gaps, and will ultimately result in shifting the TNCs cost of doing business to consumers for their personal vehicles.

How is that fair?

California’s Insurance Commissioner Dave Jones agrees. In a recent letter to the CPUC president he concludes: “as long as TNCs are encouraging non-professional drivers to use their personal vehicles to drives passengers for a profit, a risk for which personal automobile insurance is not available, TNCs should bear the insurance burden.”

Recent reports cite that Uber is poised to raise more than $10 billion in funding that would raise the value of this company to $17 billion. And yet they want to skimp on insurance for their drivers who don’t have the appropriate coverage while trolling for passengers? They’d prefer to possibly shift their insurance costs onto all other California drivers regardless of whether or not they use Uber? How is that a good business model?

Ultimately, this measure achieves a balance between important consumer protections and maintaining an environment where new ventures in the “sharing” economy can thrive.

While I am in full support of new innovative business models, we must ensure that drivers and consumers are protected—public safety cannot be compromised. The unanimous and bipartisan support of this bill indicates, however, that we support responsible innovation and that is why we agreed to the “app on, app off” standard. To go less than that measure, as proposed by TNCs, is irresponsible and leaves the public vulnerable.
—Ed’s Note: Assemblywoman Susan Bonilla represents the 14th Assembly District.